In theory, a company's market capitalization shouldn't matter to investors. A stock's prospects are largely relative to its past. A smaller size simply means fewer people can feasibly plug into that progress. In reality, however, it seems bigger companies are able to grow more than smaller ones, perhaps leveraging their size (and deep pockets) to keep would-be competition in check.
Never say never though. The three companies sporting the biggest market caps right now -- Apple (AAPL 0.68%), Microsoft (MSFT -1.16%), and Google parent Alphabet (GOOG -0.45%) (GOOGL -0.51%) -- weren't the market's biggest names several years ago. They each earned their way to the top of the pile.
With that as the backdrop, here's a closer look at three stocks that will likely display the market's biggest market caps come 2030, from smallest to largest.
Apple's recent growth pace will likely cool as it evolves into a company more reliant on sales of digital content (apps, streaming services, etc.) and less reliant on sales of its popular iPhone. But the company's reach is already so deep -- and iPhone fans are so loyal -- that the company's size ranking is apt to only slip a couple of places to the No. 3 spot.
It's really an inevitable evolution. While the original iPhone's debut back in 2007 gets all the credit for making Apple the monster company it is today, with more than 1 billion iPhones now in active use, saturation is starting to become a serious threat.
Apple has had a serious plan for life after peak iPhone adoption since 2019 though and is executing it well. While the iPhone still makes up roughly half the company's revenue, digital services are now its second-biggest business, accounting for nearly one-fifth of its top line. Look for this gap to continue closing too, as the handheld device increasingly becomes a means to an end rather than the end itself. It's not a stretch to suggest service revenue could eventually match iPhone revenue.
Here's the kicker: While this revenue shift will likely lead to slower top-line growth, service revenue is relatively consistent from one quarter to the next. Better still, service revenue is considerably more profitable than hardware sales.
Apple doesn't directly break out the data for shareholders, but a little math reveals that gross profit margin rates on devices like the iPhone stand near 37%, while services carry gross profit margins on the order of 72%. The company doesn't even really need its services unit to become massive in order to replace what slowing iPhone sales might take away.
If Nvidia (NVDA -0.01%) is able to become the world's second-biggest company over the course of the coming eight years, it would mark an incredible leap from its current position as its 14th-biggest organization. But don't rule the possibility out.
You probably know the name as a hardware maker. Nvidia's graphics cards continue to dominate the video gaming and professional visualization market, with John Peddie Research reporting the company consistently accounts for more than two-thirds of the world's purchases of stand-alone graphics processing units (or GPU), although it's done very well within certain slivers of the server CPU market as well. This is all solid enough stuff to base a long-term bet on.
But these aren't the reason Nvidia could unexpectedly and dramatically swell through 2030. The underappreciated growth driver here is going to be the explosion of the artificial intelligence market. Nvidia is ready for it.
Many people may not realize it, but Nvidia is also one of the key developers of autonomous vehicle AI systems. Just last month, electric vehicle manufacturer Nio introduced the ET7, which utilizes Nvidia's all-encompassing Drive Orin platform. Lucid will be using this same artificial intelligence for its future cars, too.
It's just a small taste of what Nvidia can offer, though. Its portfolio of DGX systems is the world's first set of systems designed and built from the ground up with the express purpose of using them in artificial intelligence applications. Indeed, the company is working on what will be the world's fastest supercomputers, based on the company's "Grace" CPU architecture. Once completed next year, Nvidia's solution will reportedly be 10 times more powerful than any system available today, opening the door to a whole new range of possibilities of what AI can accomplish.
It matters simply because we've only scratched the surface of the market. Technology market research outfit Technavio expects the highly fragmented artificial intelligence market to grow at an average annual pace of 21% through 2025, with no other company positioned quite as well as Nvidia to capture that growth.
Finally, look for Amazon (AMZN 0.64%) to top the list of the world's biggest stocks by 2030.
Surprised? It's not exactly a stretch. The e-commerce giant is already the planet's fourth-biggest organization as measured by market capitalization, so it doesn't have far to climb to reach the top. But it's a move that not too many investors see coming.
The key is the success of the businesses you typically don't see Amazon managing.
Sure, it's the world's biggest retailer -- online or offline -- but its consumer-facing business is barely profitable and lost money altogether last quarter thanks to sky-high operating costs. It just doesn't matter. While Amazon Web Services (AWS) is a much smaller operation in terms of revenue, it's now by far the company's biggest profit center.
And it's still growing -- fast. Last quarter's AWS operating income of $6.5 billion is up 56% year over year, boosted by AWS's 36% revenue growth. Look for more of the same pace of progress too.
Then there's Amazon's advertising business, which the company's only gotten serious about in the past couple of years. This venture produced $31.2 billion worth of revenue last year, growing at a brisk double-digit pace to get there. For perspective, that's more ad revenue than Alphabet's YouTube was able to generate last year, and within sight of Google's $43.3 billion worth of search revenue generated in 2021.
Simply put, Amazon is figuring out a new way to monetize the e-commerce traffic its website draws. It's still only the early stages for the high-margin effort, though. Being the world's online-shopping destination, Amazon could arguably dominate the web advertising market eight years from now.